SMM News: (IMF) Managing Director Christine Lagarde of the International Monetary Fund issued a statement at the end of the meeting of G20 finance ministers and central bank governors held in Fukuoka, Japan on Sunday, June 9.
In a statement, Lagarde stressed that although the global economy shows initial signs of stability and is expected to grow strongly, she still faces a series of downside risks.
Ms Lagarde expects weak global trade to slow global GDP growth by 0.5 per cent, or $455 billion, by 2020. In addition, with very low interest rates, the debt levels of many developed economies are rising, and emerging markets are still vulnerable to changes in the external environment. But now there is more limited room for monetary or fiscal normality to deal with all kinds of changes.
Lagarde called that in order to mitigate these risks, the first priority should be to ease the current trade tensions, while the international community needs to continue its efforts to modernize the international trading system. Policymakers need to provide markets with more certainty and confidence to help rather than hinder global growth.
At the same time in most countries monetary policy should continue to maintain sufficient space and fiscal policy should carefully balance growth debt and social objectives. In addition structural reforms including opening markets and encouraging greater participation of women in labour should be used to lay the foundations for stronger and more inclusive growth. If these measures are implemented together, the IMF estimates that they could raise G20 GDP levels by 4 per cent in the long run.
Wall Street has mentioned that the IMF released its latest World Economic Outlook at the end of the month, predicting that 70 per cent of global economic growth would slow in 2019. Cut global economic growth to its slowest pace since the financial crisis in 2019, cut US economic growth in 2019, and raised China's growth rate in 2019.
Global economic weakness is expected to continue into the first half of 2019, with global growth peaking at nearly 4 per cent in 2017, slowing to 3.6 per cent in 2018 and expected to fall further to 3.3 per cent in 2019.
IMF said that while 3.3 per cent of global expansion was still at a reasonable level, the economic prospects of many countries remained challenging and would face significant uncertainty in the short term. This is especially true as advanced economies converge to moderate long-term potential.
Although economic growth was weak in early 2019, IMF expects growth to pick up in the second half of the year. The support is that, without inflationary pressures, major economies can implement large-scale easing, although the output gap is shrinking.
On expectations of a pick-up in the second half of 2019, the IMF expects global economic growth to rebound to 3.6 per cent by 2020. IMF pointed out that this is based on the economic rebound in Argentina and Turkey and a series of improvements in other emerging markets and developing economies under pressure, so there is a lot of uncertainty.
The IMF expects global growth to stabilize around 3.5 per cent after 2020, driven mainly by growth in China and India and their increased weight in global income.